Few updates

Oil&Gas craziness continues. It seems like if the stock has anything to do with oil&gas and it trades on AMEX, it runs wild. I believe once there will be no more AMEX stocks to run, it'll spill over to Bulletin Board oil&gas stocks.

BSIC.OB jumped from $1.70's (recommendation) to $3.04 in a matter of a week. Today, it pulled back a little - nothing goes straight up (unless it's MXC). $3 is a major resistance and I'm pretty sure it'll try that again, who knows - maybe even tomorrow. The stock really started its run from $1, making it 200% run in just a few weeks. It's just taking a little break to reload. Very bright future here with excellent management. It's not your regular pump&dump stock. It's slowly gaining more interest, indicated by the increasing volume. I think the run will continue after a small consolidation.

AFAM continues to run (since recommendation at just below $21), ignoring the market weakness. During the previous market crash at the beginning of the year, it pretty much ignored it too. This is not a daytrade by any means. Just a solid long term hold.

TVOC.OB is getting ready to be discovered once the oil&gas momentum spills over to Bulletin Board stocks. The stock is priced in at prices of oil in $60's. Where else you can find an oil&gas stock with TRAILING PE of less than 16, when these previous earnings were based on $68 dollars average price of oil? Besides coming up with $0.39 in Q1, it has a tiny float - 314k.

HRBN - just trading in the range. Small weakness today due to general market weakness. The good thing it closed above 200dma, so it's holding for now.

Quick update on AAAC.OB

Very nice presentation today at Brean Murray Conference:

Link here -> http://www.wsw.com/webcast/bmry3/aaac/

Some highlights:

• Tongxin International (AAAC.OB) will be transferring to Nasdaq "in the next few days" - quote from Rudy Wilson (COO of the company) on today's presentation.
  
• Reiterated guidance for 2008 - $15 mil in net income or $1 in EPS based on 15.3 mil O/S
  
• Expansion of sales to North America and Europe
  
• Additional profitable acquisition at the end of the year
  
• More exposure after Nasdaq hits
  
• Over 30% growth
  
• Long term contracts
  
• Very experienced management (30+ years)
  

If you were on sidelines before, now it's becoming a table pounder. Warrants could provide a best play here. Notice how they are now trading at a premium

Good luck!



Side note: watch TVOC.OB for movement on MXC sympathy.

Actually, TVOC.OB is much better than MXC, which moved from $4 to $44 in just a few weeks.

TVOC.OB trailing PE is 15, while MXC's is 175
TVOC.OB float is 314k, while MXC's is 549k
Latest 1Q earnings came in at .39!!!!

Stock is priced at the last year's oil&gas prices.

In 2007:

Oil Production volume - 61,293 barrels
Average sales price per barrel - $68.04

Gas Production volume - 359,969 MCF
Average sales price per MCF - $7.24


I don't have to stress how much higher oil&gas are right now :)

Today, TVOC.OB hit all time high on the higest volume in years. Yes, it's only 36k, but that's over 10% of the float and is very high for this thin stock.
MXC started the same way. Look at it now...

Anything can happen, but with oil&gas craziness, I would not be surprised to see a double from here in this market. At the same time, it is a dangerous play, as it has very low liquidity and low float stocks are generally hard to play.

Be careful and good luck!

Blast from the past and some updates

Back in February I highlighted a promising chinese wind power stock - "China Wind Systems" (CWSI.OB). At that time it was trading at $2.00-$2.10. It had a quick run up to $2.50 and then retreated. Again - very promising due to the growth that the management expected. The trading has been really quiet for 3 months, as the momentum from china wind power never caught on with this stock. Well, lately it has been chinese stocks all over again and especially the ones with profits.

On Thursday, the company released great earnings, which actually were expected as the management provided the business outlook earlier, but for some reason these results were really NOT expected by the momo crowd :). And, what do we have? The stock suddenly jumps over 160% to close at $6.00 (up 134% on a day). I guess this is where the saying "patience pays" really applies.

I can't really predict the movement from here on, as this is now purely a momentum play and anything is possible at this point - from pump&dump to a run similar to PDO or MXC. Take your pick and be careful with it.


Now, some updates on other stocks -

China North East Petroleum (CNEH.OB)

Posted excellent earnings last week and stock did not sell off even after an impressive run up. Instead, it kept on going and today it hit the resistance right near the all-time high. Just a month ago, the stock was trading below $2 and many have lost their patience with it. Once again - "patience pays." It is turning out to be a great play of 2008 as expected, and it's not finished yet.

Highlights from the earnings release:

• 1Q08 Revenue Increases 476% to $10.8 Million
  
• 1Q08 Net Income Increases 1,052% to $3.3 Million
  
• Net income for the first quarter increased significantly to $3.3 million, or $0.17 per diluted share, versus $287 thousand, or $0.01 per diluted share, in the first quarter of 2007.
  
• We now have 157 wells in production as of the end of the first quarter and expect this number to grow on a quarterly basis as we progress through the year. Our increased cash position provides us with greater flexibility to not only drill new wells this year, but also allows us to further develop oil extraction technologies and selectively pursue acquisition opportunities.
  

The company is delivering and it's definitely gaining the Wall Street trust.
Once again, it hit the resistance at all-time high, and currently going through a small technical correction. In the long run, the stock and the company should continue to perform.


Basic Earth Science Systems (BSIC.OB)

Since highlighting this stock in $1.70, it has gained 50% (closing at 40% today), and I believe it's just starting to gain Wall Street atention. Its prospects are impressive. Nice micro oil&gas play with low O/S and float in the hottest area. Fundamentals are great for this small company. With other similar type plays making huge runs, such as PDO, MXC, FPP, I don't see why this company can't have another at least 100% run. It usually runs similar to FPP, so the race is on, in my opinion.
In the long term, I believe this is going to be a very successful company. We should hear about the new 16 wells soon, as well as the yearly results at the end of June. I expect more updates from the company between now and then.

Harbin Electric

After releasing impressive earnings that beat on both revenues and income, the stock has been in accumulating mode for at least 5 trading sessions. It's trading in very tight range between 17.80 and 18.20, and getting ready to resume the uptrend.
The company presented at Roth today. The new presentation has been posted on SEC:

http://sec.gov/Archives/edgar/data/1266719/000114420408030589/v115042_ex99-1.htm

Few highlights from it:

• Reiterating revenues projections for 2010 -> 350 million excluding acquisitions
  
• Latest acquisition -> Weihah Hengda Electric:
  2007 annual sales - 46.5 milllion growing at 30% annually would mean roughly $100 mil by 2010
  
• Meaning at least 450 millon in revevenues in 2010 for HRBN compared to only 65 mil in 2007.
  
• Foreign sales just getting started -
  -- Grew international business from 3% in 2006, 12% in 2007, 17% in 1Q2008.
  -- Established US office for business development
  
• Top Four Customer sales distribution -
  Went from 81% for top 4 customers and 19% for others in 2006 to 66% from top 4 customers and 34% for others
  
• Showing consistent revenue and income growth with stable gross margins consistently above 46%.
  

This company definitely has a great future. Remember $13's, $14's and $15's, and all the table pounding? :) These prices are starting to look further and further away. I believe they will be far away in 2010 and beyond.


No updates on AAAC (Tongxin International). Still waiting on Nasdaq. As the two stocks (CWSI.OB and CNEH.OB) showed - patience pays. It's just a matter of time before this stock makes a move.


This is all for today. Good luck!

New stocks of interest

Here are the stocks as promised:

1) BSIC.OB - Basic Earth Science Systems, Inc.
First - the business:

Basic Earth Science Systems, Inc. engages in the exploration, acquisition, development, operation, production, and sale of crude oil and natural gas in the United States. It primarily operates in the Williston basin in North Dakota and Montana, south Texas; and the Denver-Julesburg basin, Colorado. As of March 31, 2007, the company owned a working interest in 83 producing oil wells and 10 producing gas wells in the states of North Dakota, Montana, Colorado, Texas, and Wyoming. Its estimated proved developed oil and gas reserves were 1,185,000 barrels of oil equivalent. The company was founded in 1969 and is based in Denver, Colorado.

It's a small profitable oil&gas company, which can gain real attention once investors start looking for small undiscovered oil plays. You've seen how MXC jumped from 4's to 10 in a matter of few days. FPP doubled quickly. Here is another profitable play with exposure to the Bakken play in North Dakota.

Here is one paragraph from their latest PR:

"We continue to be excited as we announce these new production rates," commented Ray Singleton, president of Basic. "Our northeast production facility and its eight wells are now on-line and we should be reporting initial production rates from its new wells within a few weeks. Repeating our previous statement, to this point, there have been no real surprises; there have been no dry holes, all geologic sections were present, no completion problems were encountered and, as anticipated, production rates are varied, yet still within the parameters of our initial expectations. So far, operationally, this has been a very successful venture."

Stock has been doing great past few weeks and it's getting close to 52 week high. Earnings are expected shortly and I believe they are going to be great based on how high the oil is. WIth float of just over 6 mil, this stock can go quick on good results.

2) AFAM - Almost Family Inc.

Almost Family, Inc. and its subsidiaries provide home health care services in Florida, Kentucky, Ohio, Connecticut, Massachusetts, Alabama, Indiana, Illinois, and Missouri, the United States. It operates in two segments, Visiting Nurse (VN) and Personal Care (PC). The VN segment, which operates primarily under the trade names �Caretenders' and �Mederi-Caretenders', provides a range of Medicare-certified home health nursing services to patients in need of recuperative care, typically following a period of hospitalization or care in another type of inpatient facility. It also offers specialty programs based on local needs, such as its Cardiocare Program, Orthopedic Program, Urology Program, Optimum Balance Program, and Telehealth Monitoring Program.

I've followed this company for a long time. It's very stable, continues to make great acquisitions and easily survives any downturns in the market. This one could be a great IRA hold. Don't expect to get big gains on it fast. This is a safe long term play, in my opinion.

Latest earnings were outstanding:

http://biz.yahoo.com/prnews/080506/cltu043.html?.v=101

First Quarter Highlights:
- Net service revenues increased 23% to $39.0 million
- Visiting Nurse segment net revenues rose 30% to $29.8 million
- Net income from continuing operations increased 41% to $2.6 million
- GAAP diluted EPS increased 47% to $0.44 per diluted share
- Expanded Florida presence with $16 million acquisition of Apex Home Healthcare Services, LLC in March 2008
- Closed common stock offering of 2,250,000 shares in April 2008 for net proceeds of $37.3 million

Analysts, covering the company, just raised the target to $28. 2008 EPS is expected to be $1.42 and it has been increasing. I believe this is very conservative number.
More to come on this company....

Updates and new stocks to watch

Few updates today on the undiscovered stocks from this blog plus a few new stocks to watch.

1) Jinpan (JST) - Well, after breaking huge resistance at $30-$31 level, it never really looked back, and finally reached the level I expected it to reach - into the $40's. I'm no longer considering it undiscovered, as I belive it found a nice level to base. It may gain a little more, but the recent gain of almost 100% in just a few months make it a risky play for a short term in the volatile market conditions. Great stock, great company, great fundamentals, great business outlook, and finally a great run - Patience paid off. And as they say - move on to the next great thing!

2) Harbin Electric (HRBN) - is still one of the most undervalued stocks out there. So far, it is only 20% from the lows reached early April, but it has a lot more to gain. I've been saying before that $13's, $14's, $15's are the best prices to pick up HRBN, as with the growth it's about to experience, the share price will not stay that low for a long time.

Here is the interesting comparison. This is from the latest JINPAN (JST) release:

For the full 2008 fiscal year, the Company currently anticipates revenues of approximately $155 million, which is a 30% over 2007 sales of $119.6 million. The Company anticipates net income of approximately $21.4 million, or approximately $2.64 per diluted share, which is a 30% increase compared to 2007 net income of $16.5 million, or $2.04 per diluted share

As you can see, JST anticipates to have $2.64 per share in 2008. HRBN is not there yet, but analysts expect to see similar numbers in 2009 with continuous huge growth in subsequent years. JST traded at $18-$28 levels for a while, until the latest earnings release. These are completely different sectors, but the fundamentals and growh is what I'm after. As I expected JST to trade in the $40's, I expect HRBN to trade even higher in 3 years.

Now, back to earth :). Let's talk short term. Today the company announced that the earnings will be released early Friday morning (EST time) with CC followed. This is the first time the company is hosting a conference call to discuss the earnings as I mentioned earlier. This is a great sign, as company is maturing. It would go a long way if the company provides guidance on this conference call.
We should definitely hear more about the acquisition they made recently and how it will increase the bottom line.

On another note, the Bejing Airport Express Train Station is complete, and HRBN built prototype motors for the cars that will be put on the track. They are planning to be a big player in this area. Read their latest presentation. Here is just the last paragraph from the Roth Conference back in 2007:

"We know it's the largest mass transport market in the world, and giving an illustration on this slide here, is the difference between the future needs and the existing supply of railcars for the passenger marketplace. We estimate that there is going to be a need for 5000 cars by the year 2020, which would translate to an addressable market size in excess of $5 billion"

Once again - very undervalued at these prices.

3) China North East Petroleum (CNEH.OB) - what a run! 2008 is shaping up to be a great year for this undervalued gem. It's already up 100% and who knows how far this can go. I'm not going to write a lot about the company here. Instead, I'll point to the latest seekingalpha article, that perhaps brought some serious attention from the investors, as indicated by the huge run it had in the past few days. This is a must read for those interested in this company: http://seekingalpha.com/article/75660-china-north-east-petroleum-strong-growth-clear-visibility?source=side_bar_long_ideas.

Earnings are expected next week. So, the short term movement, given the earnings and the latest run, could be very volatile. But, if they continue to deliver great earnings and show great profits, this could gain another 100% pretty quick.

4) Tongxin International (Former Asia Automotive) (still AAAC.OB) - not moving yet, but as with many gems, patience is needed. Very nice 2007 earnings reported recently. They were a little better than I expected. Stock is trading at roughly trailing PE of little over 10, and 2008 PE of less than 8.

1Q earnings are expected shortly along with anticipated Nasdaq listing. I know it has been a long wait, but once Nasdaq listing comes, stock should begin to appreciate significantly. There has been some movement in warrants above premium, which is good sign, as investors are betting on higher prices. Not going to write any more on this one today. We'll see how it develops in the next 2 weeks.

Now, there are 2 stocks of interest that I would like to share. I will write a separate post on these tonight or tomorrow. The stocks of interest are: AFAM and BSIC.OB.

If you have any interesting undiscovered stocks to share, please write them in comments.

Good luck!